The Roles of Risk and Ambiguity in Technology Adoption
28 Pages Posted: 4 Oct 2011 Last revised: 26 Mar 2015
Date Written: June 24, 2013
We study the impacts of risk and ambiguity aversion on the adoption of new technologies, specifically genetically modified (GM) corn and soy seeds. We conduct experiments measuring risk and ambiguity aversion with Midwestern grain farmers. Risk aversion has little impact on the timing of adoption, but more ambiguity-averse farmers are the early adopters of GM corn. We hypothesize that this unusual finding is due to the fact that GM corn typically contains an insecticide-resistance trait which reduces the ambiguity of pest damages for adopters. This highlights the importance of distinguishing between risk and ambiguity when studying the effects of aversion to uncertainty on adoption.
Keywords: risk aversion, ambiguity aversion, technology adoption, genetically modified (GM) seeds
JEL Classification: Q12, Q16, C91, O33, M13
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